The Tucson Is Hyundai’s Current U.S. Success Story, but Inventory Problems Are Restricting That Success

Hyundai’s U.S. sales volume is down 13 percent through the first seven months of 2017, a year-over-year drop valued at 60,203 lost sales. Hyundai has fallen so quickly that its corporate partner, Kia, has managed to outsell Hyundai in America in each of the last three months.

But even with Hyundai sales falling nearly five times faster than the industry at large, and even with the two most popular products in the lineup — Elantra and Sonata — causing a 23-percent downturn in Hyundai passenger car sales, there’s good news to be heard out of Hyundai’s (shrinking) corner of the market.

The third-generation Tucson launched two years ago is a verifiable hit. Sales are perpetually rising. July 2017, in fact, was its best month ever.

But there’s bad news. Hyundai can’t get nearly enough Tucsons shipped across the Pacific from the compact crossover’s Ulsan, South Korea, assembly plant.

“We have the capacity to sell many more of those,” Hyundai Motor America’s vice president for planning tells Wards Auto. “Our biggest problem is not nearly enough of them. We’ve been suffering that since the very beginning.”

Hyundai’s U.S. dealers are obviously getting their hands on more Tucsons now than they were. Indeed, O’Brien says U.S. allocation has been increasing. But a vehicle such as the Tucson that’s routinely attracting more than 10,000 U.S. buyers per month would ideally have inventory of 25,000-30,000 copies in stock to maximize consumer selection and meet future demand. According to Cars.com, even with Tucson supply improving, there are fewer than 22,000 Tucsons in stock in the U.S.

Even in-demand vehicles suffer when selection is poor.

The Tucson nevertheless accounts for 16 percent of Hyundai’s year-to-date sales, up from 11 percent in the same period one year ago. Already, in only seven months, Hyundai has sold 62,964 copies of the Tucson, more than in any entire calendar year prior to this model’s launch. Hyundai is on track to sell 112,000 Tucsons in 2017 if the 25-percent rate of growth holds for the rest of the year. That’s more than double the number of Tucsons sold in America only three years ago.

Yet it could be better.

Hyundai remains cautious about the SUVs-Are-The-Answer theories of amateur automotive product planners. Hyundai is beginning to see similar levels of incentivization required to sell utility vehicles and cars, for example, while the general decline of the industry is going to increase competitiveness, an arena in which more utility vehicles will fall by the wayside.

The Tucson, however, appears to be in no danger. Hyundai’s smallest utility vehicle, at least until the Kona arrives next year with limited volume potential, is America’s 22nd-best-selling utility vehicle so far this year, ahead of the Jeep Renegade and Kia Sorento but behind the Honda Pilot and Dodge Journey.

[Image: Hyundai Motor America]

Timothy Cain is a contributing analyst at The Truth About Cars and Autofocus.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars.